Types of public enterprises

Departmental undertaking:

It is a traditional form of operating and managing affairs of public enterprise. They are organized, financed and controlled by the certain department of the government. Budget is prepared very year.

Features

• It is totally financed by treasury and all the revenues are paid into treasury.
• The budgeting, accounting and audit procedures are controlled and managed by the rules and regulations of the government
• The civil servants are the permanent staff.
• The recruitment, training, promotion, terms and conditions of employment are same for all civil servants.
• It is managed by the officials of the concerned department of the government.
• The ministry is directly controlled by administrative staff.
• The policy and performance are discussed in parliament.
• It has no separate legal entity.
• Nothing can be done without the permission of government.

Public corporation:

They are the most widely use form of organization under public enterprise. Under public corporation act 1961, statutory companies or public corporation are established. They are governed by the special act of the parliament. It is managed and controlled by board of directors and boards of directors are appointed by the government. It is established for service motive. Its main aim is to maximize the social welfare. The employees are appointed under the terms and conditions of the corporation. They are not civil servants. Some examples are; Nepal oil corporation, Nepal Airlines Corporation.

Features

• The act defines the objectives, functions, powers, rights and duties, privileges and relationship with other department of the government
• It is totally owned by the government
• In some cases, public my hold the portion of share capital
• It is a separate legal entity
• It can purchase and sell securities, can enter into any contract, can sue and can be sued
• It has independent accounting, auditing and financial system
• It is established for service motive
• Employees are not civil servants
• Employees are appointed under the terms and conditions of the corporation
• It is managed and controlled by board of directors and boards of directors are appointed by the government
• They are governed by the special act of the parliament
• Its main aim is to maximize the social welfare
• Expenditure and revenues are not shown in the budget of department

Government companies

A public enterprise which is established under the prevailing law of the country is called a government company. In this company, government owns at least 51% of total shares. This type of company is a popular form of company because it is easy to organize and is considered to be more efficient. It is incorporated under company law of the country. It doesn’t need any special act for its incorporation. There are 2 types of Government Company. They are;

1. It is totally owned by government
2. At least 51% of its shares is taken up by government

Features

• It is incorporated under company law of the country
• At least 7 promoters are required for incorporation
• It has separate legal entity
• It can purchase and sell securities, can enter into any contract, can sue and can be sued
• It is totally owned by government or at least 51% of its shares is taken up by government
• It is managed and controlled by board of directors and boards of directors are appointed by the government
• It is financed by the government
• Expenditure and revenues are not shown in the budget of department
• Employees are not civil servants
• The policies are mentioned in memorandum and articles of association
• The budgeting, accounting and audit procedures are not controlled and managed by the rules and regulations of the government
• Activities of the company are accountable to the parliament

Department board:
They are established in the form of development board. They are needed to contact different ministry for the incorporation. Its main aim is to operate public welfare development work. It is established under development board act 2013. For e.g. trade promotion center, cottage and small industry development board etc.